1. Corporate governance in entrepreneurial firms: a systematic
review and research agenda
Hezun Li & Siri Terjesen & Timurs Umans
Accepted: 5 October 2018
# The Author(s) 2018
Abstract This systematic review covers the extant
literature on corporate governance in entrepreneurial
firms. Using a sample of 137 research papers pub-
lished from pre-1990 through June 2018 in 60
journals, we categorize outlets, research methods
(quantitative, qualitative, review, and non-empiri-
cal), theoretical perspectives, and research questions,
highlighting key patterns. We then summarize the
concepts under study in the sample literature, and
the geographical sources and model specification of
quantitative empirical studies. The conclusion high-
lights the quite fragmented nature of the field and
the substantial knowledge gaps, and then proposes
an actionable agenda for future research in terms of
theories, research questions, research settings, and
research designs. In particular, we describe the need
to explore how corporate governance mechanisms
interact with one another and affect firm outcomes,
by applying novel theoretical perspectives and
methods that could provide a better understanding
of entrepreneurial firms’ functioning.
Keywords Corporate governance . Entrepreneurial
firms . Literature review. New venture boards . Research
agenda
JEL classification G30 . L26 . M10
1 Introduction
The last two decades witness a marked interest in re-
search on corporate governance of entrepreneurial firms.
While board of directors (BOD) is the most explored
corporate governance mechanism in these studies, re-
searchers also examine CEO characteristics and com-
pensation, CEO-BOD relations, top management team
characteristics and functioning, and ownership-related
aspects. The limited set of reviews (e.g., Huse 2000;
Garg and Furr 2017) and theoretical papers (e.g., Garg
2013; Broughman 2010) place primary focus on the
https://doi.org/10.1007/s11187-018-0118-1
This study was partially supported by Jan Wallander and Tom
Hedelius Foundation P2016-0246:1.
H. Li
Central University of Finance and Economics, 39 South College
Road, Haidian District, Beijing 100081, People’s Republic of
China
e-mail: hezunli@american.edu
H. Li :S. Terjesen
Kogod School of Business, American University, 4400
Massachusetts Ave, Washington, DC 20016, USA
e-mail: terjesen@american.edu
S. Terjesen
Norwegian School of Economics, Helleveien 30, 5045 Bergen,
Norway
T. Umans (*)
Department of Management Control and Logistics, Linnaeus
University, Universitetsplatsen 1, SE-351 95 Växjö, Sweden
e-mail: timurs.umans@lnu.se
T. Umans
Faculty of Business, Kristianstad University, 291 88 Kristianstad,
Sweden
e-mail: terjesen@american.edu
/Published online: 13 November 2018
Small Bus Econ (2020) 54:43–74
2. board of directors and their role in entrepreneurial firms,
leaving other governance mechanisms in the shade.
We follow Charreaux (1997, p. 421) in defining
corporate governance as Bthe set of mechanism that
define powers and influence decisions of the chief
executive^ and therefore includes corporate boards,
shareholders, and top management teams. Wirtz (2011)
constructs a conceptual model for corporate governance
of entrepreneurial firms based on this definition. As
such, our definition of corporate governance is consis-
tent with Monks and Minow’s (2012, p. 18) notion that
shareholders, directors, and executives are the Bthree
major forces that are responsible for determining corpo-
rate direction and action.^1
While boards play a pivotal
role in entrepreneurial firms’ functioning and survival
(e.g., Charas and Perelli 2013), board activities do not
occur in a vacuum and boards’ roles either interact or are
contingent on other governance mechanisms such as
CEO, owners, top management teams (TMTs), and
capital markets (Bruninnge et al. 2007). Given the recent
pivot from a singular focus on boards to examining
boards’ interaction with other governance mechanisms
in entrepreneurial firms, we believe that the field has
reached a level of maturity such that a systematic review
can help to consolidate the achievements of the field and
craft a research agenda for years to come. Focusing on
the multiplicity of corporate governance mechanisms
and their interaction with each other, this review pro-
vides insight into a configurational perspective (e.g.,
Schiehll et al. 2014; Misangyi and Acharya 2014) on
corporate governance that has yet to find its way into the
field of corporate governance of entrepreneurial firms,
and that is valuable to the field of governance of large/
listed firms as well as research on national governance
systems.
Our review offers multiple opportunities and benefits
to researchers and practitioners by highlighting the im-
portance of corporate governance research in entrepre-
neurship and revealing patterns in theory, data, method-
ology, and content. Building from this foundation, this
review then discusses future research possibilities. We
highlight how existing research is fragmented across a
range of disciplinary fields including entrepreneurship,
finance, corporate governance, and strategic
management. Apart from a multidisciplinary focus, our
study breaks away from a dual theoretical focus on
agency and resource theories (see Gabrielsson 2017),
instead exploring and drawing on alternative theoretical
perspectives. The silo-ing of the field prevents opportu-
nities to systematize knowledge to benefit practice, pol-
icy, and research generally. To the best of our knowl-
edge, the present study is the first comprehensive review
of research on corporate governance of new and small
firms.2
We follow the systematic review methodology
(Tranfield et al. 2003) to identify articles using keyword
search terms: entrepreneur*, board*, director*, ven-
ture*, and govern*. This search is broad and inclusive
of many topics within entrepreneurial firms’ boards. We
included articles published until May 2018. The co-
authors independently read and categorized all of the
articles. The final sample comprises a total of 135
articles.
2 Systematic literature review methodology
To comprehensively review the literature, we follow
Tranfield et al.’s (2003) systematic literature review
methodology and use Business Source Premier, JSTOR,
and ProQuest to search the following keywords: entre-
preneur*, board*, director*, venture*, and govern*. We
adopt the systematic review methodology due to its
effectiveness in comprehensively surveying a limited
field of study (e.g., Crossan and Apaydin 2010;
Becheikh et al. 2006; Pittaway and Cope 2007). We
decided not to limit ourselves to the specific journal or
year as we aim to explore the field’s general develop-
ment rather than present findings only from certain
journal, and to incorporate the full set of articles from
this relatively nascent field of research. After we obtain
the preliminary search results using the aforementioned
keywords, we screened research papers on the basis of
their abstracts and excluded studies that either do not
address a corporate governance issue or do not specifi-
cally investigate entrepreneurial firms. Drawing on
1
We acknowledge that Monks and Minow’s (2012) definition of
corporate governance can be debated within the context of entrepre-
neurial firms, yet it provides an established framework that is instru-
mental in structuring this review.
2
We acknowledge that two recent studies by Garg and Furr (2017) and
Gabrielsson (2017) reviewed the governance of entrepreneurial firms,
but primarily focused on the board or limited number of theoretical
perspectives. Our systematic review differs from these prior reviews by
using a broader definition of corporate governance and entrepreneurial
firms, embracing a multiplicity of governance mechanisms and theo-
retical perspectives.
H. Li et al.
44
3. Charreaux’s (1997) broad definition of corporate gover-
nance, we consider a study as addressing a corporate
governance issue if it concerns ownership, directors,
entrepreneurs, or other top managers. As there is no
widely accepted definition for entrepreneurial firms
(Gabrielsson 2017), we adopt a broad definition and
consider a study as investigating entrepreneurial firm if
it explicitly investigates Bentrepreneurial firms,^ Bstart-
ups,^ Bventures,^ Bsmall firms,^ Bsmall and medium-
sized enterprises (SMEs),^ or Byoung firms.^ This
broad definition is consistent with the most cited papers
according to Google Scholar, such as Eisenberg et al.
(1998), Hellmann and Puri (2002), Boone et al. (2007),
and Westhead et al. (2001). The final sample literature
includes 137 research papers.
In line with previous review studies (e.g., Nielsen
2010; Terjesen et al. 2016), we focus on seven themes:
journal outlets, research methods, theories, data geogra-
phy, modeling, research questions, and concepts under
study. We adopt these particular categories given their
mutual exclusivity and proven effectiveness in facilitat-
ing completely exhaustive reviews (ibid.). We utilize
two-step coding (cf. Nielsen 2010) to first analyze the
frequencies of outlets and the publication years, research
questions, research methodology, and data geography.
The second step provides more in-depth analysis by
exploring theories, concepts, and models.
3 Current state of the field
3.1 Journal outlets
As shown in Table 1, CGEF (Corporate Governance of
Entrepreneurial Firms) research papers are dispersed
across 60 identified journal outlets, where the following
three largest outlets: Journal of Business Venturing (15
papers), Corporate Governance: An International Re-
view (8 papers), and Small Business Economics (8 pa-
pers). The fragmented nature of the field is evidenced in
that there are 35 journals which each publishes only one
CGEF article. The earliest research is Trow’s (1961)
archival quantitative study on small firms’ executive
succession plans. The field’s impact is evidenced by
63 papers each with more than 100 Google Scholar
citations, with the following ten most cited articles:
Eisenberg et al. (1998, 2252 citations), Hellmann and
Puri 2002, 2073 citations), Schulze et al. (2001, 2056
citations), Boone et al. (2007, 1402 citations), Westhead
et al. (2001, 1109 citations), Sapienza et al. 1996, 922
citations), Davidsson (1991, 918 citations), Thong and
Yap (1995, 868 citations), Zahra et al. (2000, 759
citations), and Human and Provan (2000, 725 citations).
3.2 Research methods used
The first publication we identified was published in
1961 followed by three articles in the 1970s and
1980s. As shown in Table 2, the field grew quickly in
the early 1990s (7) and gained significant momentum
with 11 (1995–1999), 25 (2000–2004), 30 (2005–
2009), 37 (2010–2014), and 23 (2015–2018)
publications.
We divide research methods into four types: (1)
quantitative research, (2) qualitative research, (3) re-
views, and (4) non-empirical research.3
Of the 110
quantitative and qualitative empirical research papers,
106 conduct firm-level analysis. The remaining four
studies focus on the following: obstacles of geographic
and institutional nature venture capitalists face in their
ownership (Tykvová and Schertler 2014); relationships
between ownership structure and managers’ innovative
behavior and the contingent effect of independent direc-
tors (Omri et al. 2014); associations between small-firm
network board characteristics and network performance
(Wincent et al. 2009; Wincent et al. 2010); and TMT
diversity and its relationship to top management team
turnover (Hellerstedt et al. 2007).
Of 87 quantitative research studies, 29 studies em-
ploy archival data, and the vast majority (55 articles)
utilize survey data. Only one article analyzes interview
data both quantitatively and qualitatively, and 2 papers
apply meta-analysis. Among the 55 survey studies, only
3 papers combine survey data with other data sources
such as interviews and archival data. Of 23 qualitative
research articles, 11 are case studies with 9 utilizing
multiple cases and only one conducting a single-case
study; the other 12 qualitative articles are based on
interviews, surveys, or archives.
There are 12 prior literature reviews providing insight
into topics such as investors’ influence (e.g.,
3
We identify a research paper as quantitative if it investigates observ-
able phenomenon empirically via statistical techniques. We identify a
research paper as qualitative if it investigates phenomenon empirically
but does not address research question via statistical techniques. We
identify a research paper as review if it summarizes the findings and
knowledge from previous literature. The non-empirical papers are
either theoretical or conceptual pieces.
Corporate governance in entrepreneurial firms: a systematic review and research agenda 45
4. Chemmanur and Fulghieri 2013), board (e.g., Huse
2000; Barrow 2001), top management (e.g., Klotz
et al. 2014; Westhead and Storey 1996), mechanisms
(e.g., Audretsch and Lehmann 2014), cultural and
societal background (e.g., Audretsch and Lehmann
2014), cross-country differences (e.g., Claessens and
Yurtoglu 2013), and laws and regulations (Barnes
2007), as well as associations between corporate
Table 1 Journal outlets
Journal name No. of publications
Pre-
1990
1990–
1994
1995–
1999
2000–
2004
2005–
2009
2010–
2014
2015–
2018
Total
Journal of Business Venturing 1 2 2 1 2 3 4 15
Corporate Governance: An International Review 1 7 8
Small Business Economics 2 1 4 1 8
Journal of Small Business Management 1 1 1 3 6
Academy of Management Journal 1 1 2 1 5
Entrepreneurship and Regional Development 2 1 1 1 5
International Small Business Journal 1 1 2 1 5
Corporate Governance 1 2 1 4
Journal of Management 2 1 1 4
Journal of Management Studies 2 1 1 4
Strategic Management Journal 1 2 1 4
Entrepreneurship Theory and Practice 2 1 1 4
European Management Journal 1 1 1 3
Journal of Management and Governance 1 1 1 3
Journal of Small Business and Enterprise Development 2 1 3
Venture Capital: An International Journal of
Entrepreneurial Finance
2 1 3
Academy of Management Review 1 1 2
Administrative Science Quarterly 1 1 2
Emerging Market Research 2 2
International Journal of Entrepreneurial Behavior and
Research
1 1 2
Journal of Business Research 1 1 2
Journal of Financial Economics 1 1 2
Long Range Planning 1 1 2
R&D Management 1 1 2
Strategic Entrepreneurship Journal 2 2
Other Journals (only 1 paper in each journal) 1 0 2 7 8 11 6 35
Total 4 7 11 25 30 36 24 137
Note: Other journals include (1) Asia Pacific Journal of Management, (2) Baltic Journal of Management, (3) British Journal of
Management, (4) Business Horizons, (5) Canadian Journal of Administrative Sciences, (6) Corporate Board, (7) Economic Modelling,
(8) Education + Training, (9) Foundations and Trends in Entrepreneurship, (10) Frontiers of Entrepreneurship Research, (11) International
Business and Economics Research Journal, (12) International Journal of Business Governance and Ethics, (13) International Journal of
Disclosure and Governance, (14) International Journal of Innovation and Technology Management, (15) International Review of Business
Research Papers, (16) International Review of Financial Analysis, (17) International Studies of Management and Organization, (18)
Journal of Accounting in Emerging Economies, (19) Journal of Family Business Strategy, (20) Journal of International Management, (21)
Journal of Management & Governance, (22) Journal of Technology Transfer, (23) Journal of World Business, (24) Knowledge of
Management Research and Practice, (25) Management Decision, (26) Management Research News, (27) Management Science, (28)
Managerial Finance, (29) Omega, (30) Organization Science, (31) Seattle University Law Review, (32) Stanford Law Review, (33) The
International Journal of Human Resource Management, (34) The Journal of Finance, and (35) The Review of Financial Studies
H. Li et al.
46
5. governance and certain outcomes such as financing
(e.g., Bellavitis et al. 2017; Claessens and Yurtoglu
2013), strategic leadership (Daily et al. 2002), market
reactions (e.g., Claessens and Yurtoglu 2013), and
stakeholder relationships (e.g., Claessens and Yurtoglu
2013). There is no comprehensive review of multiple
aspects of corporate governance of entrepreneurial
firms.
Fourteen of the 15 non-empirical research papers are
primarily theoretical or conceptual. The remaining paper
is Deutsch and Ross’ (2003) analytical study of outside
directors’ signaling role which shows that high-quality
new ventures distinguish themselves from their lower
quality counterparts by appointing reputable outside
board directors.
3.3 Theories
As shown in Tables 2 and 3, agency theory is the most
frequently used theoretical perspective (56 papers),
followed by resource theories (52 papers), contingency
theory (10 papers), and institutional theory (9 papers).
There are 37 various types of theories explicitly used in
analyses, with 25 theoretical perspectives each used by
only one paper. There are 12 theoretical perspectives
which appear in at least two papers while 18 papers do
not explicitly mention a theoretical basis. Taken togeth-
er, our findings are consistent with earlier reviews which
highlight the prevalence of agency theory, resource the-
ories, institutional theory, upper echelon perspective,
stewardship perspective, stakeholder theories, and trans-
action economics (e.g., Daily et al. 2003; Huse 2000;
Bellavitis et al. 2017; Klotz et al. 2014).
3.4 Agency theory
Agency theory is applied in 38 quantitative studies, 2
qualitative studies, and 10 non-empirical studies. While
agency theory is often associated with the separation of
ownership and control, the literature explores topics
Table 2 Research methods and theories across time
No. of publications
Pre-1990 1990–1994 1995–1999 2000–2004 2005–2009 2010–2014 2015–2018 Total
Research methods
Quantitative 2 5 7 14 22 21 16 87
Qualitative 2 2 3 5 5 4 2 23
Review 1 2 1 5 3 12
Non-empirical 4 2 7 2 15
Total 4 7 11 25 30 37 23 137
Theories
Agency theory 4 3 12 15 14 8 56
Resource theories 1 3 9 15 12 12 52
Contingency theory 1 1 1 1 3 3 10
Institutional theory 1 2 3 3 9
Upper echelon perspective 2 2 2 6
Stewardship perspective 1 1 3 5
Stakeholder theory 2 1 3
Strategic management theories 2 1 3
Team production theory 3 3
Attention-based view 2 2
Cognitive perspective 1 1 2
Transaction cost economics 1 1 2
Other theories 1 2 6 5 5 6 25
No. of papers without theory 2 1 4 4 2 5 18
Our sample includes only 4 papers published before 1990: Rosenstein (1988), Robinson (1982), McGivern (1978), and Trow (1961)
Corporate governance in entrepreneurial firms: a systematic review and research agenda 47
6. such as BODs’ varying incentives to monitor manage-
ment and protect shareholders’ interest (Fama and
Jensen 1983; Jensen and Meckling 1976), how corpo-
rate governance affects agency problems reflected by
entrepreneur’s behavior (e.g., Zahra et al. 2000;
Brunninge et al. 2007), firm performance (e.g.,
Eisenberg et al. 1998), and market value (e.g., Daily
and Dalton 1992). It is noteworthy that incomplete
separation of ownership and control does not necessarily
eliminate agency problems (e.g., Jensen 1994; Schulze
et al. 2001; Liao et al. 2014). In particular, agency theory
helps explain the monitoring and control functions of
the BOD (e.g., Huse 1994; Garg 2014; Krause and
Bruton 2014), while other BOD roles and corporate
governance functions can be better understood with
multiple theoretical perspectives (e.g., Zahra and
Filatotchev 2004; Van den Heuvel et al. 2006).
3.5 Resource theories
Drawing on Huse (2000), we use Bresource theories^ to
refer to the cluster of resource-based view, resource
dependence, social capital (network), and human capital
theories. Resource theories assume that corporate gov-
ernance helps firms to secure scare resources such as
financial resources as well as human and social capital;
resource theories are applied in 30 quantitative studies
and 11 qualitative studies, and discussed in 5 non-
empirical studies. Resource theorizing explores gover-
nance mechanisms’ role in acquiring resources for en-
trepreneurial firms. Social network theory extends re-
source dependence theory by focusing on how social
networks explain board formation and composition
(Lynall et al. 2003). Knowledge is a crucial type of firm
resource, and entrepreneurial firms’ development of
new capabilities requires different knowledge from cur-
rent stocks (Zahra and Filatotchev 2004). BOD human
capital, for example, is a primary source of such knowl-
edge (e.g., Basly 2007; Zahra et al. 2009; Bocquet and
Mothe 2010).
3.6 Contingency theory
According to contingency theory, there is no universally
optimal organizational structure—the best structure is
contingent on external and internal contexts (see
Schoonhoven 1981). Using terms such as Bcontingen-
cies^ or Bcontingent^ as well as explicit claims of using
contingency theory, we identify 7 quantitative studies, 1
qualitative study, and 2 non-empirical studies. Contin-
gency theory can also be viewed as a meta-theory rather
than just a conventional theory with a specific system of
propositions (Schoonhoven 1981). Contingency theory
may actually be implied in a far greater number of
studies in our sample literature as 23 additional articles
explicitly address how various antecedents affect entre-
preneurial firms’ corporate governance configurations.
Additionally, the optimal configuration of corporate
governance may not be a single solution since various
corporate governance designs may generate similar out-
comes (i.e., equifinality) under certain contingencies
(e.g., Bell et al. 2014).
3.7 Institutional theory
Institutional theory is applied in 6 quantitative study and
1 qualitative study, and discussed in 1 non-empirical
study. Institutional theory assumes that an organization
reflects enduring rules and routines institutionalized and
legitimized by its social environment (Scott 1995;
Zattoni et al. 2017). This theory explains how formal
and informal institutions (e.g., Zattoni et al. 2017) shape
firms’ corporate governance practice (Lynall et al.
2003). It is noteworthy that institutional theory can
explain how corporate governance is affected by exter-
nal institutions such as national institutional environ-
ment (e.g., Ge et al. 2017; Zattoni et al. 2017), as well
as firm-specific institutions such as trust and relational
norms (e.g., Calabrò and Mussolino 2013; Bell et al.
2014).
3.8 Other theoretical perspectives
Other theories are only scarcely applied. For example,
the upper echelon perspective explores the relationship
between TMT characteristics and organizational out-
comes, and is applied in 4 quantitative studies, 1 non-
empirical study, and 1 literature review with a focus on
how new venture teams function in the context of cor-
porate governance (Klotz et al. 2014; Escribá-Esteve
et al. 2009; Bjørnåli et al. 2016; Jin et al. 2017). The
stewardship perspective is applied in 3 quantitative
studies and discussed in 2 non-empirical studies. Ac-
cording to stewardship theory, in certain circumstances,
executives’ and directors’ interests are similar to those
held by shareholders (Davis et al. 1997), a typical situ-
ation for family business (e.g., Sciascia et al. 2013;
Brumana et al. 2017). Stakeholder theory, which
H. Li et al.
48
7. normatively addresses how corporate governance
should be designed to represent various stakeholders’
interests (Abor and Adjasi 2007; Barnes 2007), is
discussed in 2 reviews and 1 non-empirical study. To
explain how corporate governance shapes strategic for-
mation and implementation, 2 quantitative studies and 1
qualitative study apply strategic management theories,
including business policy theory (Robinson 1982), stra-
tegic choice perspective (Fiegener 2005), and strategic
leadership theory (Van Gils 2005). Team production
theory is applied in 2 quantitative studies and discussed
in 1 non-empirical study, and conceptualizes the firm as
a connection of team-specific assets invested by various
stakeholders (Blair and Stout 1999) and views the BOD
as a cooperative team contributing to firm value by
getting involved in strategy, with each director bringing
specific knowledge to the team (Kaufman and
Englander 2005). Team production theories help explain
board strategic participation (Machold et al. 2011;
Vandenbroucke et al. 2016). Two quantitative studies
apply attention-based view which argues that decision-
makers’ limited attention affects their actions (Ocasio
1997), e.g., why directors focus on certain roles such as
board service involvement (Knockaert et al. 2015;
Bjørnåli et al. 2016). The cognitive perspective, which
addresses how cognitive process affects board effective-
ness, is applied by 1 quantitative study (Fiegener 2005)
and discussed in 1 literature review (Drover et al. 2017).
Transaction cost economics, applied in 1 quantitative
study and discussed in 1 non-empirical study, can help
explain the role of financial intermediaries in facilitating
financing activities for entrepreneurial firms (e.g.,
Tykvová and Schertler 2014; Bellavitis et al. 2017).
3.9 Data geography
As shown in Table 4, in addition to 16 papers using
multi-country data, 66 empirical research papers are
based on evidence from the USA (23 papers), the UK
(21 papers), Sweden (14 papers), and Norway (8 pa-
pers). The multi-country empirical studies utilize evi-
dence from as many as 80 countries (Chen et al. 2014).
3.10 Modeling
Firm-level survey samples include observations from at
least 35 or at most 3837 firms, while firm-level archival
studies each include observations from at least 60 or at
most 6950 firms. As shown in Table 5, 23 of 87 quan-
titative research papers use moderating variables, and 12
papers use mediating variables. Adding moderating or
mediating variables to regression model is not the only
way to test such effects; moderation can be tested with
grouped regressions (e.g., Bertoni et al. 2014); media-
tion can be tested by using the dependent variable in one
model and as a predictor in another (e.g., Zahra et al.
2000; Benson et al. 2015).
Table 3 Theories used for various types of research
Quantitative Qualitative Review Non-empirical Total
Agency theory 38 2 6 10 56
Resource theories 30 11 6 5 52
Contingency theory 7 1 2 10
Institutional theory 6 1 1 1 9
Upper echelon perspective 4 1 1 6
Stewardship perspective 3 2 5
Stakeholder theory 2 1 3
Strategic management theories 3 3
Team production theory 2 1 3
Attention-based view 2 2
Cognitive perspective 1 1 2
Transaction cost economics 1 1 2
Other theories 15 3 2 5 25
No. of papers without theory 4 8 4 2 18
Corporate governance in entrepreneurial firms: a systematic review and research agenda 49
8. A few papers use non-linear models to test non-
monotonic relationships. For example, Bertoni et al.
(2014) find that the interaction between board indepen-
dence (BI) and firm age squared positively affects IPO
valuation while the interaction between BI and firm age
is negative. By adding the squared term of board conti-
nuity variable, Wincent et al.’s (2009) investigation of
SME board networks finds a U-shape relationship
Table 4 Geographic analysis of data focus
No. of empirical studies
Country/region Pre-1990 1990–1994 1995–1999 2000–2004 2005–2009 2010–2014 2015–2018 Total
USA 3 1 1 6 6 4 2 23
UK 2 5 7 5 1 1 21
Sweden 3 3 6 1 1 14
Norway 1 3 2 2 8
Belgium 2 1 1 4
Germany 1 1 1 3
France 1 1 1 3
Italy 2 1 3
Canada 1 1 2
China (Mainland) 2 2
Singapore 2 2
New Zealand 2 2
Spain 2 2
Denmark 1 1
Dutch 1 1
Finland 1 1
Taiwan 1 1
Tunisia 1 1
Multi-country 1 1 2 1 7 4 16
Total 4 7 10 19 27 25 18 110
Table 5 Analysis of modeling for quantitative empirical research
Content Outcomes of
corporate
governance
Antecedents of
corporate
governance
Both
antecedents
and outcomes
Relationships among various
corporate governance
characteristics
Descriptive
research
All
quantitative
No. of papers 47 10 12 13 5 87
No. of papers with
moderation
15 2 2 4 0 23
No. of papers with
mediation
7 1 3 1 0 12
Avg. no. of hypotheses 4.30 5.20 5.92 5.15 0.00 4.51
Avg. no. of regression
models
4.63 6.67 2.42 4.85 0.00 4.29
Avg. no. of regression
methods
1.17 1.30 0.92 0.85 0.00 1.03
Avg. no. of explanatory
variables
3.81 7.30 6.00 2.85 0.00 4.15
Avg. no. of regressors 10.72 11.70 11.08 8.23 0.00 9.90
H. Li et al.
50
9. between the continuity of SME network board and
innovative performance moderated by network size.
Sciascia et al. (2013) also add a squared term, finding a
J-shape relationship between family involvement on
board and internationalization of family business.
Fiegener (2005) report a U-shape relationship between
number of outside directors and board strategic
participation.
Excluding descriptive research papers, quantitative
papers each on average test more than 4 hypotheses with
more than 4 regression models that contain more than 4
explanatory variables and more than 9 regressors in
total. Some early research papers test hypotheses with-
out regressions. For example, Grundei and Talaulicar’s
(2002) survey of 48 German start-ups provides evidence
for 8 propositions on how company law affects corpo-
rate governance. Brunninge and Nordqvist (2004) use t-
statistics to test 10 specific hypotheses on how owner-
ship structure affects board composition and how board
composition affects entrepreneurship in turn.
The sample literature uses a great variety of regres-
sion methods including OLS, probit, logit 2, SLS,
GMM, Heckman, and structural equations. Four re-
search papers use non-linear models, adding squared
terms as explanatory variables. Structural equation mod-
el (SEM) is applied in 6 out of 55 quantitative survey
studies. From our perspective, it seems that SEM’s
strength is not full demonstrated by prior literature.
Our sample literature exhibits complicated and
intertwined relationship among numerous constructs.
Many constructs such as BSI (e.g., Bjørnåli et al.
2016) and CE (e.g., Zahra et al. 2000) cannot be easily
observed from archival database, yet can be reliably and
validly measured by multiple-item questionnaires. SEM
enables researchers to test multiple and interrelated de-
pendence using one single model. In SEM, observable
items form or reflect constructs under study as latent
variables, and multiple relationships are captured as
pathways in the model. Such features can help re-
searchers form more comprehensive understandings of
the complex nature of entrepreneurial firm governance.
3.11 Research questions
We identify a corporate governance construct as
characterized by (1) ownership, (2) board, or (3)
top management. Based on these criteria, we cate-
gorize the main research questions addressed in each
paper as follows: outcomes of corporate governance
(category 1); antecedents of corporate governance
(category 2); both antecedents and outcomes (cate-
gory 3); relationships between corporate governance
characteristics (category 4); descriptive research
(category 5); and discussion of general issues (cate-
gory 6). This review excludes constructs that are
only captured by control variables.
Although a research paper may address more than one
research question, we use the aforementioned 6 catego-
ries to cluster papers. We include a research paper in
category 1 if it explicitly addresses corporate governance
concepts and the effects caused by these concepts (i.e.,
outcomes), yet does not discuss what proceeds them (i.e.,
antecedents). We include a paper in category 2 if it
discusses corporate governance concepts and their ante-
cedents yet does not explicitly discuss outcomes. Cate-
gory 3 articles discuss both the antecedents and outcomes
of corporate governance. Each paper in category 4 ex-
plores the relationship between various identified corpo-
rate governance concepts without explicitly considering
either outcomes or antecedents. Category 5 papers only
describe situations of corporate governance concepts
without discussing their relationships. Category 6 articles
discuss corporate governance as a general issue without
scrutinizing specific concepts and relationships. Table 6
shows the number of research papers in each category
and some example research questions and findings.
3.12 Concepts under study
Using the same criteria in the previous subsection, we
summarize the concepts studied in our sample literature
and report related findings. All identified concepts are
categorized into corporate governance characteristics,
outcomes, and antecedents. Corporate governance char-
acteristics are clustered into 4 groups: ownership struc-
ture, board characteristics, top management characteris-
tics, and other constructs related to the aforementioned
three stakeholder types. Table 7 presents the concepts
identified in previous literature.
4 Corporate governance characteristics
4.1 Ownership structure
VC ownership In our sample literature, venture capital
(VC) ownership is the most frequently discussed owner-
level predictor. Investors work actively with portfolio
Corporate governance in entrepreneurial firms: a systematic review and research agenda 51
10. Table 6 Content and sample research directions
Sample research questions Sample findings Examples of future research
directions
Category 1. Outcomes of corporate governance: 68 studies (quantitative: 47; qualitative: 10; review: 6; non-empirical: 5)
How does governance drive entrepreneurial
orientation (EO) in small firms? (Deb and
Wiklund 2017)
Founder status and ownership create powerful
personal incentives for small firm CEOs to engage
in behaviors that influence EO. The
founder-CEO’s prior managerial experience in
start-up firms positively moderates the founder-EO
relationship. (Deb and Wiklund 2017) [quantitative
survey]
Alternative non-financial
outcomes such as market
orientation, market-driven and
market-driving strategies,
ambidexterity
Do VC and outside CEOs change portfolio
firms’ business model? (Gerasymenko et al.
2015)
VCF involvement positively affects PFC
performance. The VCFs’ experience with business
model change and the recruitment of an outside
CEO to the PFC both increase the positive impact
of VCF involvement. (Gerasymenko et al. 2015)
[quantitative survey combined with archival data]
How do new ventures access advice to achieve
high growth and sustainable performance?
(Ahn 2014)
Advisory boards and boards of directors have a
significant role in managing and creating value for
emerging high-growth firms due to inherently high
failure rates, technological complexity, and market
risk—all of which requires access to external
resources. (Ahn 2014) [quantitative meta-analysis]
Sustainability reporting
What is the effect of the presence of different
types of individual owners, i.e.,
owner-managers and non-manager
individual shareholders, on the performance
of high-tech entrepreneurial firms?
(Colombo et al. 2014)
The number of owner-managers has a positive effect
on firm performance. (Colombo et al. 2014)
[quantitative archival]
Entrepreneurial team
characteristics in their relation
to team process and team
effectiveness and efficiency
What is the dynamic inter-relationship
between corporate governance, venture
capital ownership. and financial
performance? (Farag et al. 2014)
A high level of VC ownership and its reputation leads
to better corporate governance in IPO companies,
which positively affects financial performance.
(Farag et al. 2014) [quantitative archival]
Entrepreneurial exit
How do VC investments affect corporate
governance and financial stability of IPO
firms in the emerging markets? (Liao et al.
2014)
VC-backed firms have less agency problems related
to excess control than non-VC-backed firms at the
time of IPO. VCs are more likely to improve the
excess control problem in firms with
weak-governance-structure than those with
strong-governance-structure. VC-backed firms are
less likely to encounter financial difficulty than
non-VC-backed firms. (Liao et al. 2014)
[quantitative archival]
Social performance in emerging
markets
Does family involvement in board have a
positive or negative impact on a company’s
performance? (Sciascia et al. 2013)
Family involvement in the board of directors and
performance of the company have a J-shaped,
non-linear relationship. (Sciascia et al. 2013)
[quantitative survey]
To what extent do (both formal and informal)
features of boards of directors (dual
governance) influence family SME export
intensity? (Calabrò and Mussolino 2013)
Formal and informal governance mechanisms can
co-exist complementing and supplementing each
other, thus positively influencing family SME
export intensity. (Calabrò and Mussolino 2013)
[quantitative survey]
Decisions to stay local/national
players
How do cross-country differences in
shareholder protection against self-dealing
and personal bankruptcy laws affect the
financing of new technology-based firms
(NTBFs)? (Vanacker et al. 2014)
Better shareholder protection rights increase the
probability of raising external equity financing and
allow firms to raise larger amounts of equity
financing. Less forgiving personal bankruptcy laws
decrease the probability of raising debt financing
and limit the amount of debt financing that is
raised. VC ownership strengthens the
Capital budgeting and
accounting choice in
entrepreneurial firms
H. Li et al.
52
11. Table 6 (continued)
Sample research questions Sample findings Examples of future research
directions
aforementioned relationships. (Vanacker et al.
2014) [quantitative archival]
Does corporate governance structure affect
manager’s innovative behavior? (Omri et al.
2014)
Ownership structure is significantly associated with
manager’s innovative behavior. The relationship is
fully mediated by outsiders’ representation on the
board. (Omri et al. 2014) [quantitative survey]
Explorative and exploitative
orientation
How do governance mechanisms affect the
ability of SMEs to introduce strategic
change? (Brunninge et al. 2007)
Closely held firms exhibit less strategic change than
do SMEs relying on more widespread ownership
structures. To some extent, closely held firms can
overcome these weaknesses and achieve strategic
change by utilizing outside directors on the board
and/or extending the size of the top management
teams. (Brunninge et al. 2007) [quantitative
survey]
Does board size affect financial performance?
(Eisenberg et al. 1998)
There is a significant negative correlation between
board size and profitability in a sample of small and
midsize Finnish firms. (Eisenberg et al. 1998)
[quantitative archival]
Category 2. Antecedents of corporate governance: 13 studies (quantitative: 10; qualitative: 1; review: 1; non-empirical: 1)
Does the collective endowment of industry
experience among the firm’s top managers
affect the amount of industry experience
provided by outside directors? Does the
firm’s liability of newness (captured by firm
age) moderate this resource provision? (Kor
and Misangyi 2008)
Among younger entrepreneurial firms, a dearth of top
management industry experience is offset by the
presence of outside directors with significant
managerial industry experience, providing
evidence of experience supplementing by outside
directors. The notion of experience supplementing
at the upper echelons prevails in young firms as
they try to alleviate the burdens of the liability of
newness. (Kor and Misangyi 2008) [quantitative
archival]
Managerial discretion perceived
and factual
How is board size and board independence
affected over time? How is board
independence related to manager influence?
(Boone et al. 2007)
Board size and independence increase as firms grow
and diversify over time. Board size—but not board
independence—reflects a tradeoff between the
firm-specific benefits and costs of monitoring.
Board independence is negatively related to the
manager’s influence and positively related to
constraints on that influence. (Boone et al. 2007)
[quantitative archival]
The nature of board
independence and dependence
on the firm owners
How do new ventures and small businesses
access knowledge resources? (Audretsch
and Lehmann 2006)
There is a strong link between geographical proximity
to research-intense universities and board
composition. (Audretsch and Lehmann 2006)
[quantitative survey]
What is the impact of CEO influence over the
board of directors on CEO pay for both large
and small firms? (Joe Ueng et al. 2000)
CEO pay of large firms is mostly a function of CEO
influence over the board, firm size, and firm
performance, while firm size is the primary factor
of CEO pay for small firms. (Joe Ueng et al. 2000)
[quantitative archival]
Dyadic relations of CEO and
CFO as well as CEO and
Chair
Category 3. Both antecedents and outcomes: 18 studies (quantitative: 12; qualitative: 3; review: 2; non-empirical: 1)
Why even with deficient formal institutions do
many economies have high rates of
entrepreneurship in recent years? (Ge et al.
2017)
Entrepreneurs with political connections are willing
to reinvest despite a weakening institutional
environment. (Ge et al. 2017) [quantitative survey]
Contextual discretion, perceived,
and actual
How does the interaction of public and
corporate governance systems affect global
entrepreneurial young firms’ strategic
Corporate governance systems interact with public
governance to harmonize the interests of different
claimants, especially in disputes that arise across
The role and nature of
public-private partnership
Corporate governance in entrepreneurial firms: a systematic review and research agenda 53
12. Table 6 (continued)
Sample research questions Sample findings Examples of future research
directions
choices as they seek to position themselves
in their markets? (Zahra 2014)
national borders. Corporate governance systems
ensure effective monitoring of owner-managers
and define what they do and how to do it in a
highly globalized environment. (Zahra 2014)
[non-empirical]
constellation involving
entrepreneurial firms
What is the effect of the August 25, 2010,
announcement of the proxy access rule on
small firms in US? (Stratmann and Verret
2012)
The unanticipated application of the proxy access rule
to small firms, particularly when combined with
the presence of investors with at least a 3% interest
(who are able to use the rule), resulted in negative
abnormal returns. (Stratmann and Verret 2012)
[quantitative archival]
How do threshold firms sustain corporate
entrepreneurship? (Zahra et al. 2009)
Firms’ boards and absorptive capacity complement
each other in fueling corporate entrepreneurship
activities. (Zahra et al. 2009) [multiple case study]
Can VCs add value beyond the money they
provide to their portfolio companies?
(Sapienza et al. 1996)
VC experience, uncertainty, agency risk, and business
risk predict VC’s face to face interaction with CEO.
Venture needs, uncertainty, and VC experience
predict value added by VC involvement. (Sapienza
et al. 1996) [quantitative survey]
What determines entrepreneurial firm growth?
(Davidsson 1991)
Ownership dispersion, firm age, and firm size affect
the need for growth, which together with
entrepreneur’s ability affect firm’s growth
motivation. (Davidsson 1991) [quantitative survey]
Category 4. Relationships among various corporate governance characteristics: 14 studies (quantitative: 13; review: 1)
Does interactions between outside board
members and the top management team
(TMT) affect the functioning of the outside
board? (Vandenbroucke et al. 2017)
Conflict between TMT and outside board is an
important antecedent for outside board service
involvement. (Vandenbroucke et al. 2017)
[quantitative archival]
Processes between board and
TMT and strategic actions in
supra TMT constellations
What is the role of top management team
(TMT) and board chair characteristics as
antecedents of board service involvement
(BSI)? (Knockaert et al. 2015)
TMT diversity positively affects board service
involvement. CEO duality negatively affects board
service involvement. Board chair industry
experience is an important moderator. (Knockaert
et al. 2015) [quantitative survey]
Complementarity and
dissimilarity of board and
TMT human and social capital
in relation to firm outcomes
What tensions exist between the founding
teams of high-tech startups and the external
equity stakeholders? Do outside board
members have human capital that
compliments or substitutes the founding
team? (Clarysse et al. 2007)
High-tech start-ups with a public research
organization as an external equity stakeholder are
more likely to develop boards with outside board
members with complementary skills to the
founding team. (Clarysse et al. 2007) [quantitative
survey]
What affect board selection in initial public
offerings (IPOs)? (Filatotchev 2006)
Board independence, cognitive capacity, and the
incentives of non-executive directors are
negatively associated with the experience and
power of executive directors. Large-block share
ownership is positively associated with the
intensity and diversity of non-executives’
experience. The retained equity by venture
capitalists negatively affects board independence
and non-executive directors’ interests. (Filatotchev
2006) [quantitative archival]
Board/Chair/CEO/TMT
leadership and firm outcomes
What is the relationship between venture
capital (VC) firms and portfolio firms?
(Gabrielsson and Huse 2002)
Venture capital firms purposefully use boards in the
portfolio firms. Boards in venture capital-backed
firms are more active than boards in other firms.
(Gabrielsson and Huse 2002) [quantitative survey]
What is the difference between boards of
venture capital-backed companies with the
Boards of directors in venture-capital backed
companies are more involved in strategy formation
Board and TMT selection
processes and antecedents
H. Li et al.
54
13. firms to provide resources (Landström 1990) which af-
fect firm performance (Landström 1992). As financial
intermediaries, VCs provide financial resources to firms
(Steier and Greenwood 1995), help guarantee financial
stability, and reduce agency problems in order to secure
their interests (Liao et al. 2014). However, VCs’ roles
differ from traditional financial intermediaries (Hellmann
and Puri 2002) in terms of offering managerial experi-
ence and know-how that might improve portfolio firms’
performance (Gerasymenko et al. 2015; Farag et al.
2014), and purposefully use portfolio firms’ board of
directors to actively participate in firm governance
(Gabrielsson and Huse 2002; Deakins et al. 2000b;
Fried et al. 1998). Specifically, VCs can nurture product
Table 6 (continued)
Sample research questions Sample findings Examples of future research
directions
boards of other types of organizations?
(Fried et al. 1998)
ad evaluation than board where members do not
have large ownership stakes. One of the most
significant value-adds of venture capitalists is their
involvement with strategies for firm growth. (Fried
et al. 1998) [quantitative survey]
Category 5. Descriptive research: 14 studies (quantitative: 5; qualitative: 9)
How are board directors selected for SME
firms? (Charas and Perelli 2013)
Directors are commonly selected to join boards based
on their professional capital, but are seldom
screened for understanding and appreciation of
appropriate behavior inside and outside the
boardroom or ability and willingness to address
affective conflict in either realm. (Charas and
Perelli 2013) [interview]
Exposure mechanisms in
similar/dissimilar other board
selection
What is the role of external or non-executive
directors and entrepreneurs in small growth
companies? (Deakins et al. 2000b)
External directors (or NEDs) do bring value-added
benefits to a growing small company. Even when
external directors are appointed by venture capital
firms they perform more than mere monitoring
functions. (Deakins et al. 2000b) [interview]
What is the role of boards in owner-managed
SMEs? Do boards enhance good
governance in SMEs? (Neville 2011)
The role of a board as a resource is more important
than its control role. Good governance appears to
be associated with the existence of boards and of
outside board members. (Neville 2011)
[quantitative survey]
The role of Bgood governance^
discourse in entrepreneurial
firms
What is the function of board of directors
necessary for small firms? (Teksten et al.
2005)
Critical factors influencing board function and action
included needs of the company, abilities of the
directors, sophistication of ownership and
management, as well as life cycle stage, percent of
family ownership and trading status of the
corporation’s stock. (Teksten et al. 2005)
[quantitative survey]
Conflict resolution role of the
board in entrepreneurial firms
What are the characteristics of good
cooperation between an entrepreneur and a
venture capitalist? (Landström 1990)
Continuous interaction between the entrepreneur and
the venture capitalist seems to be of the utmost
importance for the result of the portfolio firm.
(Landström 1990) [multiple case study]
Category 6. Discussion of general issue: 10 studies (review: 2; non-empirical: 8)
What data and research currently exists in the
field of SMEs, especially in relationship to
Boards of directors? (Huse 2000)
There is extensive research in the field of SME
boards, which can be categorized in several key
ways, despite the continued statement in SME
research that there is little available data. (Huse
2000) [review]
- Compensation as a governance
mechanism in entrepreneurial
firms
- Managerial labor market in
entrepreneurial firms
Can sound corporate governance policies
address managerial incompetence? (Abor
and Adjasi 2007)
The problems of managerial incompetence and credit
constraints could be resolved through good
corporate governance structure. (Abor and Adjasi
2007) [non-empirical]
The role of media in the
governance of entrepreneurial
firms
Corporate governance in entrepreneurial firms: a systematic review and research agenda 55
14. innovation (Chemmanur and Fulghieri 2013) and shape
HR policy (Hellmann and Puri 2002). Similarly, institu-
tional ownership boosts R&D economic return (Kor and
Mahoney 2005) and affects firms’ innovation behavior
(Omri et al. 2014). Angel investment also boosts product
innovation (Chemmanur and Fulghieri 2013).
Family ownership It remains uncertain whether and
under which governance conditions family firms are
entrepreneurial (Le Breton-Miller et al. 2015). Family
SMEs’ conservatism and a lack of relevant knowledge
hinder internationalization (Basly 2007), while non-
family directors positively affect family firms’ pace of
internationalization (Calabrò and Mussolino 2013).
Family firms exhibit less strategic change (Brunninge
et al. 2007) and fewer innovation behaviors (Omri et al.
2014), and are more reluctant than non-family firms to
appoint independent directors to their boards
(Brunninge and Nordqvist 2004).
Founder, CEO, and TMT ownership Studies on insider
ownership produce mixed results. Corporate entrepre-
neurship (CE) is relatively high when executives hold
stock in their company (Zahra et al. 2000), while Kroll
et al. (2007) find that ownership by TMT members who
are also on board is positively associated with post-IPO
performance, and that this relationship is positively
mediated by even ownership distribution across TMT
board members. Bell et al. (2014) describe how CEO
stock options predict high IPO valuations under certain
context conditions. CEO founder status is positively
associated with entrepreneurial orientation (EO), yet
CEO ownership negatively predicts EO (Deb and
Wiklund 2017). Two characteristics of closely held
firms, CEO ownership and TMT ownership, lead to less
strategic change (Brunninge et al. 2007).
Director ownership Zahra et al. (2000) find that a firm’s
CE is relatively high when its outside directors own its
stock. Keasey et al. (1994) report a curvilinear (positive
and then negative) relationship between firm perfor-
mance and the percentage of equity held by the board
of directors.
Other ownership issues Davidsson (1991) posits that
ownership dispersion naturally incentivizes a firm’s
growth motivation simply because Bthere are more
mouths to feed.^ The literature explores various forms
such as Clarysse et al.’s (2007) report that high-tech
start-ups with public research organizations as external
Table 7 Concepts under study in previous literature
Antecedents Corporate governance characteristics Outcomes
a) National level institution
b) Firm-specific characteristics
Ownership structure
a) VC ownership
b) Family ownership
c) Founder, CEO, and TMT ownership
d) Director ownership
e) Other ownership issues
Board characteristics
f) Board role
g) Board size
h) Board composition
i) Board behavior
Top management characteristics
j) Duality, founder status, and owner status
k) Compensation
l) TMT characteristics
m) Behavioral and psychological characteristics
n) Succession
Other constructs
o) Corporate governance index
p) Human capital
q) Social capital
r) Reputation and signaling
s) Informal mechanisms
a) Firm value
b) Financial performance
c) Non-financial performance
d) Financing activity
e) Agency problems
f) Business survival
g) Corporate strategy
H. Li et al.
56
15. equity stakeholders are more likely to develop a BOD
with outside directors whose skills complement the
founding team. Omri et al. (2014) show that state own-
ership is positively associated with outside director pro-
portion. There are significant difference between inde-
pendent and subsidiary plants/operating units in leader-
ship style, culture, and strategic making and implemen-
tation (Ghobadian and O’Regan 2006).
4.2 Board characteristics
Board size Usually defined as the number of directors
on board, board size is one of the basic variables of
empirical corporate governance research; however,
there is no consensus on the relationship between board
size and firm performance (e.g., Eisenberg et al. 1998;
Dalton et al. 1999). Studies on entrepreneurial firms also
generate mixed findings: some show that firm profit-
ability is negatively correlated with board size
(Eisenberg et al. 1998) while others indicate that larger
board size is positively associated with higher corporate
governance level (Gordon et al. 2012) and productivity
(Cowling 2003), and helps solve agency problem
(Boone et al. 2007). Given the multiple roles of BOD,
perhaps board size as a variable fails to capture many
specific aspects of the nature of BOD. After all, two
boards of the same size may significantly differ in their
impact on corporate governance if they vary in other
characteristics such as composition and directors’
resources.
Board composition Board composition is discussed in
the literature in terms of non-executive director (NED),
outside director (or external director), or independent
director, often interchangeably (e.g., Deakins et al.
2000a, b; Omri et al. 2014). One cluster of studies
explores NED roles, showing that NED presence on
the board ensures accuracy of financial information
and adherence to the business plan (Barrow 2001), and
also provides a specialist assistance when appointed by
the VC rather than by someone else (Deakins et al.
2000b), ensures executive learning (Deakins et al.
2000a), and signals a well-functioning firm (Deutsch
and Ross 2003).
Outside directors affect the firm in various ways,
including facilitating internationalization (Calabrò and
Mussolino 2013), innovation (Omri et al. 2014), board
strategic participation (Fiegener 2005), and strategic
change (Brunninge et al. 2007). Outside directors’
ownership also affects firm commitment to corporate
entrepreneurship (Zahra et al. 2000). In the family firm
context, Sciascia et al. (2013) find a J-shape relationship
between family presence on board and sales internation-
alization: sales internationalization decreases and then
slightly increases with an increase in the proportion of
family directors. Similarly, Calabrò et al. (2017) find
that the presence of non-family directors positively af-
fects internationalization.
Gabrielsson and Huse (2005) highlight the impor-
tance of using theories of agency, resource-based view,
and resource dependency to understand outside direc-
tors’ multiple roles. A young firm’s outside directors
provide resources for TMT’s strategy implementation,
rather than just TMT monitoring (Kroll et al. 2007).
Outside directors’ specific experience, as well as diver-
sity and tenure, can significantly affect firm perfor-
mance (Vandenbroucke et al. 2016) and may alleviate
the burdens of firms’ liability of newness (Kor and
Misangyi 2008). For example, high-tech start-ups with
public research organization shareholders tend to have
outside directors with skills that complement the
founding team (Clarysse et al. 2007).
Researchers do not fully understand how indepen-
dent directors affect entrepreneurial firm performance
(e.g., Brunninge and Nordqvist 2004; Boone et al. 2007;
Boone et al. 2007). Bertoni et al. (2014) propose that a
firm’s board independence decision is determined by the
relative importance of two board roles: value creation
and value protection. The authors identify a U-shape
relationship between firm’s board independence and
firm age such that in young firms, board independence
negatively predicts IPO valuation as value creation role
dominates, and in mature firms, board independence
positively predicts IPO valuation as value protection
role dominates.
4.3 Top management characteristics
Duality, founder status, and owner status Due to in-
complete separation of ownership and control, it is
natural for many young firms to have a CEO or manager
who is board chair, founder, or owner (Banham and He
2010). Various theoretical perspectives (e.g., agency
theory and stewardship theory) predict the effect of
CEO duality differently (Donaldson and Davis 1991).
An early study by Daily and Dalton (1992) fails to find
significant relationship between CEO duality and firm
performance; however, later studies show that CEO
Corporate governance in entrepreneurial firms: a systematic review and research agenda 57
16. duality negatively affects corporate entrepreneurship
(Zahra et al. 2000) and strengthens the positive associ-
ation between TMT diversity and BSI (Knockaert et al.
2015). CEO founder status is positively associated with
entrepreneurship orientation (Deb and Wiklund 2017).
Owner-managers may lead to low horizontal agency
costs (Colombo et al. 2014), but some agency problems
ignored by Jensen and Meckling (1976) exist in private-
ly owned, owner-managed firm (Schulze et al. 2001).
Several studies focus on the characteristics of owner-
managers. Hankinson et al. (1997) explore the key
characteristics of SME owner-managers that influence
performance outcomes including behavior and lifestyle,
skills and capabilities, and management method.
Hansen and Hamilton’s (2011) qualitative study shows
that owner-managers’ ambition and positive worldview
contribute to firm growth. By contrast, only one study
examines the outside CEOs’ role: Gerasymenko et al.
(2015) find that outside CEO and VC experience in
strategic change strengthens the positive effect of VC
involvement on firm performance.
Compensation In our sample literature, only 2 research
papers specifically address compensation for entrepre-
neurial firm management. Joe Ueng et al. (2000) com-
pare the determinants of compensation in small firms
with those for large firms and find that CEO pay for
small firm is primarily determined by firm size. Schulze
et al. (2001) find that pay incentive positively affects
performance of non-family managers, but not family
managers. These findings suggest that major differences
may exist between small firms and large firms in the
performance effect of pay incentive.
TMT characteristics Top management teams are fre-
quently addressed in sample literature. Studies show
that start-up TMTs exhibit high cohesion and social
integration and low levels of conflict (Grundei and
Talaulicar 2002) and that such cohesion guarantees
TMTeffectiveness (Bjørnåli et al. 2016). TMT diversity
benefits entrepreneurial firms in various ways but may
also drive an individual to leave the team (Hellerstedt
et al. 2007) or make decision-making less effective and
thus leads to higher level of BSI (Knockaert et al. 2015).
TMT size and outside directors both positively affect
strategic change while their interaction does negatively
(Brunninge et al. 2007). Kroll et al. (2007) find that,
besides TMT ownership, TMT size and TMT presence
on board are positively associated with post-IPO firm
value. Firms’ strategic orientation is affected positively
by TMT’s experience and negatively by familial nature,
and in turn positively affects firm performance (Escribá-
Esteve et al. 2009). Andersson et al. (2004) find that
formal TMTactivities captured by management meeting
frequency are positively associated with
internationalization.
Behavioral and psychological characteristics The ex-
tant literature also covers behavioral and psychological
aspects of top management. CEO locus of control pos-
itively affects firm performance in terms of growth
(Davidsson 1991) and profitability (Boone et al. 1996).
Entrepreneurial orientation (Wiklund et al. 2009) and
strategic planning (Berry 1998), as well as entrepreneur
style (Sadler-Smith et al. 2003), drive firm growth and
are affected by CEO characteristics such as ownership
and founder status (Deb and Wiklund 2017) and direc-
tors (such as non-family directors) (Calabrò et al. 2017).
Managerial ethical orientation can be directed by
policymakers to influence small firms’ ethics (Spence
and Rutherfoord 2001). Managers’ who hold more pos-
itive attitudes towards ITadoption will be more likely to
succeed in this adoption (Thong and Yap 1995).
Succession Well-planned manager succession is a cru-
cial factor for firm survival and success (Trow 1961;
McGivern 1978); however, there is no subsequent
research.
5 Board roles and behaviors
Board roles Several research papers address entrepre-
neurial firms’ board roles. Bennett and Robson (2004)
highlight the importance of viewing board, consultant,
and top management skills as substitutes. A survey by
Teksten et al. (2005) indicates that board functions for
small privately held companies lack formality and are
significantly influenced by factors such as the firm’s
need, director ability, ownership/management sophisti-
cation, life cycle stage, family ownership, and trading
status of the firm’s stock. Huse and Zattoni (2008) show
that BODs get involved in legitimacy, advisory, and
control tasks in start-up phase, growth phase, and crisis
stage respectively. Neville’s (2011) survey reveals that
the SME board’s resource role is more important than its
control role. Pollman (2014) underlines Blair and
Stout’s (1999) team-production-theory-based
H. Li et al.
58
17. understanding of the role of BOD, namely that BOD is a
mediating hierarchy that encourages firm-specific in-
vestment in team production.
Board behaviors BODs play an important role in strat-
egy formation (Rosenstein 1988) which contributes to
firm effectiveness (Robinson 1982) and entrepreneurial
posture (Gabrielsson, 2007a, b). Board strategy involve-
ment in entrepreneurial firms is positively affected by
VCs’ presence (Fried et al. 1998), board leadership
(Machold et al. 2011), outside directors’ presence, orga-
nizational transition or potential downturn, low CEO
ownership, and firm size (Fiegener 2005). Following
Huse’s (2007) notion of board role as a composite of
three elements—Benhancing company reputation,^
Bestablishing contacts with the external environment,^
and Bgiving counsel and advice to executives^—several
research papers use the construct Bboard service in-
volvement (BSI).^ Huse and Zattoni’s (2008) case study
shows that BODs perform the abovementioned three
types of tasks on the basis of different types of trust
relationships between internal and external actors.
Survey-based empirical evidence shows that BSI ante-
cedents include TMT characteristics (e.g., size and di-
versity), CEO duality, board chair industry experience
(Knockaert et al. 2015), and TMT-outside board task
conflict and relationship conflict (Vandenbroucke et al.
2017), and that BSI mediates the relationship between
TMT diversity and TMT effectiveness (Bjørnåli et al.
2016). Other studies use board meeting number or fre-
quency to capture formal board activity and find a
positive association with internationalization
(Andersson et al. 2004), strategic change (Brunninge
and Nordqvist 2004), and board strategic involvement
(Pugliese and Wenstøp 2007).
5.1 Other constructs related to ownership, board,
and top management
Corporate governance index Only 2 research papers
construct a comprehensive index to capture corporate
governance level. The CGAIM50 index developed by
Farag et al. (2014) consists of 50 equally weighted items
such as Bsmall board,^ Bchair/CEO split,^ and Bnon-
executive chair.^ Their research shows that VC owner-
ship and reputation positively affect entrepreneurial
firms’ corporate governance levels, which in turn posi-
tively affects financial performance measured by return
on assets (ROA). Gordon et al.’s (2012) index of 14
observable items for small publicly traded Canadian
companies highlights a significantly positive association
between corporate governance and accrual quality or
Tobin’s Q.
Human capital Human capital from owners, directors,
and entrepreneurs contribute to firm performance (e.g.,
Sapienza et al. 1996; Vandenbroucke et al. 2016;
Colombo and Grilli 2010). Prior literature discusses
the benefits of various specific types of human capital,
including VC experience (Sapienza et al. 1996), director
knowledge (Zahra and Filatotchev 2004; Collinson and
Gregson 2003; Bocquet and Mothe 2010), director ex-
perience (Zahra and Filatotchev 2004), director educa-
tion (Bennett and Robson 2004), academic degree
(Audretsch and Lehmann 2006; Bennett and Robson
2004), qualification, TMT knowledge (Van Gils 2005),
manager experience (Davidsson 1991; Kor and
Mahoney 2005), and manager training (Storey 2004).
It is important that different types of social capital match
one another. For example, Clarysse et al. (2007) find
that high-tech start-up boards tend to have skills that
complement the TMT. Directors and external consul-
tants’ skills substitute for those of internal management
(Bennett and Robson 2004).
Social capital Social capital is another value-adding
resource for entrepreneurial firms. Studies of social
capital address various types of social networks, includ-
ing those of VCs (Steier and Greenwood 1995), incuba-
tors (Collinson and Gregson 2003), firms (Wincent et al.
2010; Wincent et al. 2009; Human and Provan 2000),
interfirms (Rosa 1999), and entrepreneurs (Stam et al.
2014; Basly 2007; Curran et al. 1993)—including po-
litical connections (Ge et al. 2017).
Reputation and signaling Deutsch and Ross (2003)
show that new ventures may credibly signal their high
quality by appointing reputable directors. Prestigious
executives, directors, venture capital firms, and under-
writers increase IPO valuation (Pollock et al. 2010);
however, entrepreneurs may obscure corporate gover-
nance information to create a false image (Benson et al.
2015).
Informal mechanisms Only one research paper explic-
itly studies informal mechanisms: Calabrò and
Mussolino (2013) find that relational norm and trust,
Corporate governance in entrepreneurial firms: a systematic review and research agenda 59
18. as well as board independence, positively affect
internationalization.
5.2 Outcomes of corporate governance
Firm value To capture the firm value recognized by the
capital market, various studies use variables related to
share price, including market value growth (Wiklund
et al. 2009), P/E (Daily and Dalton 1992), Tobin’s Q
(Bertoni et al. 2014; Gordon et al. 2012), cost of capital
(Claessens and Yurtoglu 2013), and IPO return (Kroll
et al. 2007), valuation (Pollock et al. 2010; Bertoni et al.
2014), and underpricing (Certo et al. 2001; Benson et al.
2015). In addition, VC value add and other corporate
governance aspects can be measured using question-
naire items (Sapienza et al. 1996; Cowling 2003).
Financial performance Profitability and growth are two
critical aspects of entrepreneurial firms’ financial per-
formance. Profitability in the reviewed studies is mea-
sured by ROA (Daily and Dalton 1992; Keasey et al.
1994; Boone et al. 1996; Eisenberg et al. 1998; Escribá-
Esteve et al. 2009; Farag et al. 2014), ROE (Daily and
Dalton 1992), cash flow on asset, gross margin (Boone
et al. 1996), pre-tax profit (Bennett and Robson 2004),
and ROS (Robinson 1982). Sales (turnover) growth is
frequently used to capture firm growth in financial per-
spective (Robinson 1982; Davidsson 1991; Berry 1998;
Schulze et al. 2001; Westhead et al. 2001; Sadler-Smith
et al. 2003; Wiklund et al. 2009; Chen et al. 2014).
Internationalization is captured primarily by export sales
(Westhead et al. 2001; Andersson et al. 2004; Basly
2007; Sciascia et al. 2013; Zahra 2014; Calabrò et al.
2017).
Non-financial performance Growth and innovation are
two crucial outcomes of corporate governance (e.g.,
Huse and Zattoni 2008; Coulson-Thomas 2007;
Chemmanur and Fulghieri 2013; Ahn 2014). Many
research papers measure growth by more than one
means—that is, not only by market value and sales,
but also by employee growth (Robinson 1982;
Davidsson 1991; Westhead et al. 2001; Colombo and
Grilli 2010; Chen et al. 2014). Entrepreneur’s growth
motivation is another growth-related concept under sur-
vey study (Davidsson 1991). Innovation can be mea-
sured by questionnaire and survey items (e.g., Bennett
and Robson 2004; Omri et al. 2014). It is noteworthy
that innovation is not a homogeneous concept (e.g.,
Wincent et al. 2010) and can be measured variously,
including radical innovation and incremental innovation
(Wincent et al. 2010), IT adoption (Thong and Yap
1995), R&D economic return (Kor and Mahoney
2005), and patent filing (Vandenbroucke et al. 2016).
In addition, as a survey-based construct, corporate en-
trepreneurship (CE) reflects firms’ innovation and ven-
turing activities (Zahra et al. 2000, 2009). A few studies
use survey items to capture TMT-level outcomes such as
team effectiveness (e.g., Bjørnåli et al. 2016).
Financing activity Steier and Greenwood’s (1995) case
study highlights VCs’ traditional role in securing finan-
cial resources for entrepreneurial firms. Corporate gov-
ernance helps firm get greater access to financing
(Claessens and Yurtoglu 2013). Various studies address
the link between corporate governance and traditional
equity financing (Wu et al. 2007; Landström 1992; Paul
et al. 2007; Vanacker et al. 2014) and debt financing
(Vanacker et al. 2014). New sources of entrepreneurial
finance make it easier for ventures to raise capital and
grow, but also bring new challenges (Bellavitis et al.
2017). Other studies focus on internal financing such as
firm reinvestment of after-tax profit (e.g., Ge et al.
2017).
Agency problems Despite the frequent use of agency
theory, only a few research papers explicitly measure
agency problems, mostly utilizing indirect variables
such as earning quality (Gordon et al. 2012), excessive
control (Liao et al. 2014), financial problems (Liao et al.
2014), and total factor productivity (Colombo et al.
2014).
Business survival A few papers examine how corporate
governance affect business survival and failure (e.g.,
Theng and Boon 1996; Westhead et al. 2001; Liao
et al. 2014).
Corporate strategy Despite the impact of corporate
governance on strategy, a few papers examine strategy
per se, using constructs such as strategic change
(Brunninge et al. 2007) and differentiation strategy
(Boone et al. 1996).
5.3 Antecedents of corporate governance
National level institution Institutional environment
greatly affects the entrepreneurial firm’s corporate
H. Li et al.
60
19. governance configuration (Bell et al. 2014; Ge et al.
2017; Zattoni et al. 2017). Specific aspects of national
level institution are discussed and examined, including
company law (Grundei and Talaulicar 2002), regulation
and public policy (Westhead et al. 2001; Stratmann and
Verret 2012; Zahra 2014), and investor protection (Bell
et al. 2014; Barnes 2007).
Firm-specific characteristics Entrepreneurial firms’
corporate governance configuration can be contingent
on complementary to various firm-specific characteris-
tics, including size (Boone et al. 2007; Davidsson 1991;
Andersson et al. 2004; Fiegener 2005), age (Boone et al.
2007; Davidsson 1991; Andersson et al. 2004; Stam
et al. 2014), life cycle stage (Lynall et al. 2003), number
of business segments (Boone et al. 2007), location
(Davidsson 1991; Westhead et al. 2001), technology
level (Andersson et al. 2004), absorptive capacity
(Zahra et al. 2009), past performance (Hellerstedt et al.
2007), resource independence (Basly 2007), access to
external knowledge (Audretsch and Lehmann 2006),
competition (Westhead et al. 2001), uncertainty
(Sapienza et al. 1996; Andersson et al. 2004), and agen-
cy risk (Sapienza et al. 2000).
6 Discussion of future research directions
This section discusses specific future research direc-
tions. Table 8 summarizes the theories applied and
emerging themes from the 5 most cited empirical studies
in every 5 years. We noticed that although resource and
agency theories dominate this field, recent studies are
increasingly aware of the importance of behavioral and
psychological perspectives (e.g., attention-based view,
self-efficacy theory, and imprinting theory). The roles of
VCs and outside directors have been frequently
discussed since 1988. In the early 1990s, researchers
began to notice social networking as a key success factor
for entrepreneurial firms. In the 1990s, researchers ad-
dressed the performance of entrepreneurial firms from
the aspects of growth and innovation. Later their ongo-
ing discussions expanded into internationalization and
IPO market reaction. Board-management relations
caught attentions in the early 1990s, but remained large-
ly unnoticed until recently. Besides, recent studies pay
increased attention to board behaviors such as board
service involvement.
Following Jackson et al. (2003), we summarize op-
portunities for future studies and threats that may under-
mine their contributions or slow the accumulation of
new knowledge.
6.1 Theories: future directions
Agency and resource theories are the most frequently
used perspectives in the extant literature. Given the
dominance of these theories in the field, the majority
of the articles reviewed might be providing a meaning-
ful contribution to the field of corporate governance and
strategic management through exploration of entrepre-
neurial firm context, yet leaving development of entre-
preneurship theory in a shade. Only recently, entrepre-
neurship inspired theories such as imprinting (e.g.,
Judge et al. 2015a, b) and self-efficacy (e.g.,
Knockaert et al. 2015) theories have found its way into
field. The dominance of the strategic management
scholars as well as theories (see Table 8) have been an
important developmental force in the field of entrepre-
neurship, yet it presents the field with a challenge.
Agency and resource theories have been developing
with an eye on the large/stock listed corporations where
the governance structures as well as organizational out-
comes differ significantly from those of the entrepre-
neurial firm. While board independence and board mon-
itoring along with financial performance and competi-
tive advantage are recurring themes within strategic
management, these are misaligned with the entrepre-
neurship field’s interest of, i.e., venture capitalist role
in the board, founders’ role and behavior, entrepreneurs’
identification, and effectuation as well as outcomes such
as survival, growth, and entrepreneurial exit among
others. While not diminishing the role of strategic man-
agement theories and scholars in the development of
entrepreneurship as a field, we thus see a need of divert-
ing field’s attention to a more entrepreneurship-
grounded theories or theories that are providing a dif-
ferent lens on the governance of entrepreneurial firms.
We identified four emerging theoretical perspectives
in this field: contingency theory, institutional theory,
upper echelon perspective, and team production theory.
In recent years, these theories are adopted by an increas-
ing number of studies. Contingency theory was devel-
oped in the field of management control (e.g., Gerdin
and Greve 2004) and provides a crucial lens to examine
the antecedents of corporate governance and the fit
between corporate governance characteristics and
Corporate governance in entrepreneurial firms: a systematic review and research agenda 61
23. internal and external environment of entrepreneurial
firms. Institutional theory, that was emergent in the field
in the 1990s and beginning of the millennium, is also
ripe for further development, for example, exploring
how differences in the national environment (e.g., legal,
cultural) lead to distinct entrepreneurial firms’ corporate
governance forms. A separate strand of institutional
theory could explore the potential for isomorphism.
For example, are there dominant corporate governance
structures by ventures from particular incubators, serial
entrepreneurs, or signpost stakeholders such as law and
accounting firms? Upper echelon perspective can be
used to further examine how TMT characteristics inter-
act with ownership structure, board characteristics, and
corporate governance mechanisms. Besides, team pro-
duction theory (Machold et al. 2011) can also be applied
on team and individual level of analysis in order to
further understand how directors or/and top managers
function as a team and how individual team member
interacts with one another and what type of dynamics in
entrepreneurial teams are associated with which organi-
zational outcomes (cf. Zander et al. 2015).
The future offers possibilities to utilize new and more
entrepreneurship grounded and applied theories and to
develop a more comprehensive understanding of entre-
preneurial firms’ corporate governance mechanisms.
For example, the emerging theory of corporate gover-
nance deviance (Aguilera et al. 2018) could be used to
examine how entrepreneurial firms’ corporate gover-
nance templates may deviate from national models. Real
options reasoning (McGrath 1999) could be used to
explore entrepreneurial firms’ decisions in a corporate
governance context. Furthermore, it is reasonable to
believe that individual entrepreneurs’ perceptions and
behaviors mediate the effect of corporate governance on
firm-level outcomes; however, the majority of our sam-
ple are firm-level studies that do not scrutinize individ-
ual behavior. A few research papers investigate how
corporate governance can affect or be affected by direc-
tors’ or entrepreneurs’ perceptions and behaviors. We
suggest that, to better understand this issue, future re-
search use behavioral and psychological perspectives,
such as schemata, social identity, and cognitive disso-
nance theories. One challenge with respect to
individual- and team-level variables is the difficulty of
making observations. Surveys can capture individual-
and team-level variables, yet surveys’ anonymous na-
ture may make it infeasible to accurately measure firm-
level outcomes at the same time. Therefore, it may be
very demanding to test the association between corpo-
rate governance and human and team behaviors, and
even more difficult to test the association between such
behaviors and firm performance.
6.2 Research questions: future directions
We note a gap in the literature in that most studies
address the outcomes of certain corporate governance
characteristics. In recent years, an increasing number of
studies simultaneously investigate the antecedents and
the outcomes of entrepreneurial firms’ corporate gover-
nance. Future researchers should pay close attention to
potential contingencies or antecedents at all levels: in-
dividual, board, external stakeholder, firm, and environ-
mental context. Our review also highlights that most
empirical studies focus more on Bwho^ is governing
than on Bhow^ to do it—extant research focuses on
profile characteristics (e.g., VC ownership, family own-
ership, board size, outside directors, experience, and
education). We encourage future researchers to explore
behavioral characteristics (e.g., BSI, board roles, board
meetings, and informal mechanism).
Many research papers on ownership structure specif-
ically discuss a certain type of owner (e.g., VC owners,
family owners, and founders), pointing to a need for
future researchers to address the relationship and inter-
action between different types of owners. Scholars
should explore whether there is coordination or conflicts
between different types of owners, whether certain
owners dominate the control of certain entrepreneurial
firms, and that what will happen if they do. A related
gap in the literature surrounds corporate governance
stakeholders’ decisions about whether or not to go pub-
lic, or revise other ownership structures.
While the extant literature often discusses board
composition, especially in terms of outside status, there
are critical gaps around the relationship and interaction
between different types of directors. We encourage fu-
ture researchers to explore these relationships. More-
over, there is a need to examine other types of board
composition such as gender, age, geographic location,
prior experience, and social networks. Furthermore,
given multiple board roles and limited board size, re-
searchers out to explore: What entrepreneurial firm
board composition structure will achieve the greatest
level of efficiency and performance? Future researchers
should build on our understanding that each type of
director brings certain benefits and costs (including
Corporate governance in entrepreneurial firms: a systematic review and research agenda 65
24. opportunity cost) to entrepreneurial firms, such as ben-
efits from outside directors (e.g., Vandenbroucke et al.
2016) and inside directors (e.g., Kroll et al. 2007).
Future researchers should go beyond examining the
influence of a certain type of directors, such as TMT
directors, VC-backed directors, or outside directors, and
explore how various types of directors fit into the BOD
and function as a team to direct entrepreneurial firm
efficiently. This line of enquiry should explore both
board profiles and behaviors should be scrutinized.
Top management characteristics are less frequently
discussed than ownership structure and BOD. Based on
our review, we suggest that future research extend
Clarysse et al.’s (2007) findings about how TMT and
BOD can cooperate and complement one another’s
skills and capabilities to more deeply address the rela-
tionship between TMT and BOD and explore the fit
between them. Our review indicates that boards are
entrepreneurs’ potential Bbattlefield^ against outsiders
(e.g., Charas and Perelli 2013). AVC can shape a firm’s
HR policy and replace the founder with an outside CEO
(Hellmann and Puri 2002). We caution that researchers
may not identify a general Boptimal^ configuration of
corporate governance for entrepreneurial firms, because
contingency theory suggests that the effectiveness of
certain configuration is contingent on various contextual
factors, which we encourage future studies to take into
consideration.
Inspired by previous literature, we propose several
specific research directions in the third column of Ta-
ble 6. We suggest that future research investigate the
relations and interactions among various key players
within entrepreneurial firms. For example, future re-
search can examine dyadic relations of CEO and CFO
as well as CEO and board chair to better understand the
nature of board independence and dependence on the
firm owners by examining the social ties between the
owners and directors. This particular line of enquiry is
emerging in other fields of strategy research. Moreover,
researchers could venture into the processes between
board and TMT that shape strategic actions in supra
TMT (Finkelstein et al. 1996) constellations, as well as
the complementarity or dissimilarity of board and TMT
human and social capitals and its implications for entre-
preneurial firms.
We also encourage researchers to examine the behav-
iors of key stakeholders in addition to their demographic
characteristics. Given the trend of new ventures initiated
by entrepreneurial teams (Jin et al. 2017), future
research could explore how entrepreneurial team char-
acteristics affect team process and in turn affect team
effectiveness and efficiency. The studies could also look
at different aspects of leadership of board, chair, CEO,
or TMT and their relation to affect entrepreneurial firms
functioning.
To better understand the outcome of corporate
governance, future research can investigate alterna-
tive firm-level non-financial outcomes such as mar-
ket orientation, and ambidexterity as well as ventur-
ing into sustainability reporting, and social perfor-
mance. Future research can also investigate the im-
pact of corporate governance at individual or team
level. For example, future research can explore how
corporate governance characteristics affect entrepre-
neurial team efficiency, managerial discretion, ex-
plorative or exploitative orientation, capital
budgeting, and accounting choices. Future studies
are expected to pay more attention to the anteced-
ents of corporate governance. For example, re-
searchers can investigate what affect board and
TMT selection processes and how firms configure
their governance in response to perceived or actual
contextual discretion and public-private partnership
constellation.
Future research can expand to topics that are not
frequently discussed by previous CGEF literature. For
example, descriptive studies can cast light on the expo-
sure mechanisms in similar/dissimilar other board selec-
tions, the role of Bgood governance^ discourse in entre-
preneurial firms, and the conflict resolution role of the
board in entrepreneurial firms. Besides, researchers are
expected to pay more attention to managerial compen-
sation as a governance mechanism, the role of manage-
rial market, and the role of media.
6.3 Research settings: future directions
In the sample literature, most empirical studies are based
on evidence from OECD countries, while only a few
studies investigate corporate governance practice for
entrepreneurial firms in emerging economies. We do
not recommend simply replicating previous research
and comparing cross country differences; we suggest
that future studies take advantage of unique institutional
factors in emerging economics, such as specific regula-
tions, to extend the understanding of the antecedents of
corporate governance.
H. Li et al.
66
25. Furthermore, cultural characteristics from various
countries and regions can be investigated so that re-
searchers can better understand how corporate gover-
nance practice can be shaped by informal institutions.
However, we caution against overemphasizing cultural
differences and uniqueness, as we expect that various
findings across various countries or regions can be
explained with general theoretical frameworks. For ex-
ample, Bguanxi culture^ is frequently addressed in
China-based empirical studies (e.g., Braendle et al.
2005). In fact, Bguanxi^ simply means Bsocial ties^ or
Brelationship^ in Chinese language. Therefore, there is
no major difference between guanxi and concepts such
as political connection (Ge et al. 2017), social network,
and social capital (Szeto et al. 2006), which can be
effectively explained by social network perspective
(e.g., Zhou et al. 2007).
We also encourage future researchers to explore new
settings such as entrepreneurial social enterprises which
have their own unique corporate governance regula-
tions. These types of firms emerge from both developed
and emerging economies which could potentially pro-
vide an exciting setting for cross-country investigations.
6.4 Research designs: future directions
The sample literature exhibits a great variety of
research designs. However, only a few studies use
SEM to analyze survey data. We suggest that future
studies take advantage of this method to capture the
intertwined relationships between various corporate
governance, outcome, and antecedent constructs. We
also encourage researchers to use non-linear regres-
sion specifications to test non-monotonic relation-
ships. However, we believe that every pathway of
SEM or specification of regression equation should
be grounded in complete theory-based development
of hypotheses. We also encourage researchers to
unpack the black box of firm governance by
conducting qualitative studies of actual board dis-
cussions and actions. Few studies in our review rely
on grounded theory, phenomenology, ethnography,
and narrative, yet increasing number of recent cor-
porate governance studies suggests that studies
employing these methodologies can bring new in-
sights into a relatively saturated field of studies
(e.g., Fletcher et al. 2016; Boddy 2017) (Table 9).
Table 9 Suggested future research directions
Theory
Opportunities Challenges
Rediscover agency, resource, institutional perspectives
Apply new theoretical lenses, e.g., governance deviance, team
production theory
Apply behavioral and psychological perspectives
Focus on team and individual levels of analysis
May be difficult to observe individual- and team-level variables and
link them to firm-level outcome variables
Research questions
Opportunities Challenges
Explore relationship and interactions among various types of
ownerships
Extend research on board composition
Further discuss the relationship between TMT and BOD,
especially BOD with VC’s or TMT’s presence
May not be able to find Boptimal^ configuration
Identify entrepreneurial firms’ unique contingencies
Research setting
Opportunities Challenges
Emerging economies
Cultural characteristics
Social entrepreneurship ventures
Cross-country studies
Simple replication without understanding unique institutional factors
Overemphasis on cultural difference
Research design
Opportunities Challenges
SEM
Non-linear regression
Use of qualitative methods
Inadequate theoretical basis for model design
Reinvent existing theories rather than emerging new ones
Corporate governance in entrepreneurial firms: a systematic review and research agenda 67
